Bank is seeing strong interest for placing fresh FCNR (B) deposits from NRIs in the Middle East, Singapore and Hong Kong
Federal Bank reported a healthy 36.50 per cent year-on-year (yoy) increase in first quarter net profit at ₹1,177 crore on the back of a strong growth in net interest income and lower loan provisions.The private sector bank had logged a net profit of ₹862 crore in the year ago quarter.The Bank’s board on Friday approved raising of funds in Indian currency or any other permitted foreign currency by way of issue of debt instruments up to ₹10,000 crore on a private placement basis.To a specific question on the Bank’s plans to mobilise FCNR (B) deposits under the RBI’s limited period concessional swap facility, MD & CEO KVS Manian said: “We see FCNR(B) deposits as a significant opportunity over the next quarter. We are working on various arrangements, both for customer leverage and on our own International Banking Unit (IBU) balance sheet.“We believe Federal Bank has a meaningful market share in this business and expect to secure our fair share of the inflows. However, it is still early, and we will have a clearer picture over the next quarter.”He observed that the Bank is seeing strong interest for placing fresh FCNR (B) deposits from NRIs in the Middle East, Singapore and Hong Kong. However, markets such as the US, UK and Australia are relatively less attractive for this product because of tax considerations.On the quantum of leverage the Bank may offer NRIs for placing fresh FCNR (B) deposits, Manian said: “We are not offering very high leverage. Our leverage offerings are likely to be in the range of 8x to 12x, which we believe is prudent.”Overseas marketTo another question on the possibility of the Bank tapping global markets via overseas foreign currency borrowing route, Manian said: “We are prepared from a regulatory and ratings perspective and remain ready to access the overseas market.“The current window remains open until December, and we will monitor market conditions and pricing. If raising funds overseas makes economic sense, we will pursue it. We remain alert to the opportunity.”S&P Global Ratings had recently assigned the Bank its inaugural international issuer credit ratings of “BBB-/Stable” for the long-term and “A-3” for the short-term.In the reporting quarter, Federal Bank’s net interest income (difference between interest earned and interest expended) rose 26 per cent yoy at ₹2,946 crore (₹2,337 crore in the year ago period).However, total non-interest income declined about 6 per cent yoy to ₹1,048 crore (₹ 1,113 crore) mainly due to a sharp 92 per cent fall in treasury income to ₹22 crore (₹265 crore).Net Interest Margin (NIM) rose to 3.33 per cent (2.94 per cent in June 2025).Profit riseManian said: “Our profit grew nearly 37 per cent in a period when treasury had a challenging period, which tells you that the earnings are coming from the core business, not from market gains.“Net interest income growing 26 per cent against advances growth of 15 per cent represents the expansion in our NIMs, which has been a core focus for the bank.”He emphasised that the Bank’s net NPA (non-performing asset) at 0.18 per cent (0.48 per cent in the year ago quarter) is the lowest in its recent history, and simultaneously and provision coverage ratio stands at 87 per cent.Loan loss provisions declined about 28 per cent yoy to ₹274 crore (₹ 383 crore). Income tax outgo was lower at ₹461 crore (₹ 614 crore).Gross Non-Performing Assets (GNPAs) position improved to 1.52 per cent of gross advances as at June-end 2026 against 1.91 per cent as at June-end 2025.Gross advances increased by about 15per cent yoy to ₹2,81,240 crore as at June-end 2026 on the back of growth in Commercial Banking ( 22.96 per cent YoY), CV/CE (21.07 per cent), Gold Loans (33 per cent), LAP (21 per cent) and Credit Cards (36 per cent).Total deposits rose 11.37 per cent yoy to stand at ₹3,20,118 crore as at June-end 2026. Non-resident deposits accounted for a third of the total deposits. Low-cost CASA (current account, savings account) deposits composition improved to 32.23 per cent of total deposits against 30.35 per cent in the year ago quarter.Federal Bank’s shares closed at ₹348.80 apiece, up 6.68 per cent over the previous close on BSE.Published on July 17, 2026
